Tuesday, April 10, 2012

Silicon Valley of the 14th Century: What the U.S. Can Learn From 1386 Germany

From the Atlantic:

This is a story about how innovation happens. It begins with
the Papal Schism of 1386 (seriously), demonstrates the ability of
universities to foster capitalism, and concludes with a surprising hero
of the modern world: lawyers.

Reuters

If you want an illustration of just how crucial a role education
plays in economic development, there are any number of modern case
studies to choose from. You can look at India's flourishing IT industry,
or China's inexhaustible supply of manufacturing engineers. You can
look at the U.S. after World War II, where the G.I. bill brought
college, and middle-class prosperity, to the masses.

But why stop with this century, or the last? For a dose of seriously
retro economics, you can look back to the dawn of the Renaissance, where
the introduction of higher education helped make possible the
efflorescence of trade that built Europe's early modern economy,
according to a new working paper from researchers at the University of
California, Berkeley, and the University of Munich.

INNOVATION IN THE 14 CENTURY

Let's step back in time for a moment to the late Middle Ages and
early Renaissance, a period from about 900 to 1500 AD when plate armor
was in vogue, and Europe was transforming itself from an illiterate
backwater into the world's dominant economic and military power. As
authors David Cantoni and Noam Yuchtman write, the time was defined by
an economic revolution, as trade expanded, local markets flourished, and
workers moved from farms into small cities, where they could specialize
in new occupations.
This was also the era when the continent's
first institutions of higher learning were founded, starting with the
University of Bologna in 1088. But did schools create thriving
economies, or did thriving economies create schools? To find an answer,
Cantoni and Yuchtman looked at modern-day Germany.

14th CENTURY RHINE VALLEY VS. 21st CENTURY SILICON VALLEY
Though
it would one day become the mecca of dour philosophers and the Ph.D.
students who love them, Germany was actually a bit late to the game when
it came to establishing universities. Before the 14th century, Germany
youths had to travel abroad for an education, often to modern-day
France. hat changed with the Papal Schism of 1386, when rival popes from
Rome and France both lay claim to the leadership of the Catholic
Church. German students loyal to the Roman faction were expelled from
their French universities.

Suddenly, Germany had to build itself some colleges.

This
bright line between Germany's pre- and post-college eras makes it an
ideal test case. These schools weren't founded as the result of a hot
economy. They were founded to educate students kicked out of their study
abroad programs...MORE